Another Roller Coaster Week Ending Worst Month Over a Year!

Another roller coaster week as the market fell 4% before recovering to finish flat for the week. Concerns over Europe continue to drive fear in the markets as volatility has nearly tripled in the span of a month. Technical trading has caused wide price swings compounding the nervousness amongst investors. The selling pressures have forced a May market drop of more than 8%, the worst monthly performance in quite some time. We expect volatility to remain elevated over the near term and expect range based trading on the Market Index until these fears begin to subside. We remain optimistic that the market will finish the year higher and consider this correction an excellent time to buy.

Momentum And Value (MAV Screen): Breakout Stocks To Buy!

What Stock Tips do we have? For this week, we have four stocks on our Breakout list. Amerigroup (AGP, Healthcare Facilities) and Delta Apparel (DLA, Apparel/Accessories) remain on our list from the prior week. We have added two new stocks, LaCrosse Footwear (BOOT, Footwear) and Clearwater Paper (CLW, Paper Products). LaCrosse is a developer and marketer of footwear for work and outdoor use. The company distributes products domestically, as well as internationally in Asia, Europe, and Canada. The stock price has been on a tear for the past year and momentum remains strong. Consumer spending continues to rise and that provides a lift to retailers. The stock is starting to get a little pricey, but we think there is more money to make over the next 6 months. Clearwater Paper produces tissue and paperboard products in the US. This is more of a defensive play as the company makes basic products that consumers need regardless of the state of the economy. Valuation is strong with a low PE, around 4. Return on Equity has been exceptional at 60% and we expect the strong cash flows to continue. The stock has been a bit rocky lately, so patient investors can get a discount if they wait for a 5% pullback. We still consider Industrial SVCS (IDSA, Waste Management) a buy, but have removed from our breakout list given our purchase last week. All in all, we think the recent correction provides an excellent buying opportunity for both stocks and options.